Philippine Central Bank Keeps Rate Unchanged
The Bangko Sentral ng Pilipinas kept its policy rates untouched on Thursday after an off-cycle rate hike in October and hinted at more tightening if required to steer inflation towards a target-consistent path.
The Monetary Board, led by Governor Eli Remolona, maintained the target reverse repurchase rate at 6.50 percent.
Accordingly, the interest rates on the overnight deposit and lending facilities were retained at 6.0 percent and 7.0 percent, respectively.
“Guided by incoming data, the BSP remains prepared to resume monetary policy tightening as necessary to steer inflation towards a target-consistent path, in line with its price stability mandate,” the bank said.
The board observed that keeping the policy rate steady at the current meeting will allow previous policy adjustments to continue to work their way through the economy.
The bank had raised the policy rate by a quarter-point at an unscheduled meeting in October.
Although pent-up demand continues to diminish in the near-term, the rebound in the third quarter supports the assessment that the medium-term growth prospects remain largely intact, the board noted.
The Philippine central bank lowered its 2024 risk-adjusted inflation forecast to 4.4 percent from 4.7 percent, and 2025 inflation is projected at 3.4 percent, which was down from 3.5 percent.
Nonetheless, the bank said, “…the balance of risks to the inflation outlook still leans significantly toward the upside”.
Despite the latest pause, BSP will remain ready to hike rates in the near term given its latest risk-adjusted inflation forecast of 4.4 percent for 2024, ING economist Nicholas Mapa said.
The economist said the currency is set to move sideways but benefit from the hawkish signals coming from the BSP.
With inflation likely to slow further over the coming months, the tightening cycle is now over, Capital Economics economist Gareth Leather said.
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